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Honestly, we don't want to sound like alarmists. However…we are sounding an alarm!
As we all know, prices are rising, consumer confidence is falling, layoffs are rampant, and inflation, particularly with the impending tariffs, is likely to persist. All of which could combine to drive the economy into a recession. Grim.
Savvy retail owners are starting now to draft new "game plans" for this new economic environment. We want you to be one of the savvy ones.
For one example of how that can be done, consider the “torrent of adjustments” made by Starbucks' most recent new CEO Brian Niccol. (The company has had four CEO changes in the past five years.)
Essentially, he has enacted the moves of a classic turnaround plan, one that matches cost-cutting tactics with strategic goals, both quantitative and qualitative. (All without a chainsaw.)
Identify the problem "Niccol arrived to Starbucks with a clear sense of what ails the chain, that as it has worked to court more and more mobile and drive-thru customers, it has lost its sense of purpose and what originally led consumers to the chain—that coffee shop feel." *
Develop a strategy that addresses the problem "Retailers often reduce the inventory of slower-moving merchandise, and Starbucks is doing the same thing in an attempt to improve operations, reduce wait times, and improve profit margins."**
Roll out the action plan
On the job for six months, Niccol has certainly impressed Wall Street with his action plan. As recounted in The Wall Street Journal,*** Niccol boldly
has cut 13 drinks from the US menu
has a goal for 4 minutes for delivery of most drinks
has made 9 changes among top executives
and he has cut 1100 Starbucks corporate jobs
We're suggesting that, whether you have 3 employees or 3,000, you prepare a contingency plan just as bold – and balanced – as Starbucks.
When the seas get rough, it's a good time to already have a good compass for the way forward.
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* Jonathan Maze, "Starbucks is rethinking its coffee shops. Restaurant Business, March 12, 2025.
** Shelley E. Kohan, "How Starbucks Is Working To Revive The Brand", Forbes, March 3, 2025.
*** Heather Haddon, “Starbucks’s Overhaul By The Numbers." The Wall Street Journal, March 13, 2025
As we approach April of 2021, the question for retailers is "Now what?" Having survived 2020, in many cases on guts and guile, we must now focus on how best to survive 2021 and beyond. As having one foot on the dock and one foot in the boat, the future of retailers in that Red Zone is not a pretty picture. Granted, there is much talk about the expectation that "convenience" will become a major factor for shoppers going forward. And we don't disagree.
Here's the deal: We see that this has brought heightened awareness of two different retail strategies: Convenience Retailing versus Destination Retailing.
About a year ago, as the pandemics were beginning to hit their stride, we introduced a framework for retailers to "rethink your merchandise mix."
As depicted in the chart above, we cautioned that once the lockdown was over, as customers resumed shopping, retailers should be prepared for (1) reduced sales totals overall; (2) significantly re-balanced merchandise mixes, initially dominated by "basics/never-outs."
Further, we anticipated that the merchandise mix would continue to change as we re-emerge from the effects of the pandemics. And we urged retailers to take this overall construct and adapt it to their own situation; to develop their own customized strategic response.*
Now, one year later, here's how this can become "news you can use" to quickly produce your Big Picture buying plan. Especially in the spring of 2021, some practical answers to "What to buy?" , "How much?" and "When?" are likely to be very welcome.
Yes, we know. Owning a retail business these days is one flexibility test after another. And there are no one-size-fits-all solutions. In the United States, one of the most widespread impacts of the virus is uncertainty. With no end in sight. It is the virus that is in charge. As the president of Alaska Airlines noted, "We don't know what the future looks like."* But the fact remains, whomever is selling to the ultimate consumer has leverage. Might that be you?
The season of ghosts and goblins and things that go bump in the night is upon us. While Halloween comes and goes, there may be another very unhappy monster haunting retailers this Holiday season. And it is spooky! What is this monster? It is an unintended consequence of the good faith efforts of many retailers to provide "excellent customer service." Customer expectations have been raised to heights that may not be fulfilled this year. A grim reality is setting in.
Retailers, it’s time to be proactive. In the midst of this unprecedented and unsettling Coronavirus pandemic and its disruptions of daily routines, you are (or will soon be) in the midst of a whirlwind. As one person observed, "It's like walking a tightrope in a hurricane." And with the changes that seem to occur at an ever-faster pace, every day can feel like whack-a-mole.
As we look out at the second half of 2023, we're actually quite optimistic for independent retailers worldwide. No, really! The statistics haven't yet borne out what we are "seeing," but just wait a bit. To begin our justification, let's look at the really Big Picture. Generally, the Covid pandemic has been wrestled down. Likewise, inflationary prices seem to no longer be a threat. The worrisome political scene has resumed its traditional state of boredom, and the major concern now is something we can't do much about: each day's weather. So, looking at the Big Picture, we see the general population for the second half of the year to be quite serene, even optimistic. And that bodes very well for shoppers' confidence!
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